I was going to get a nyloc nut, but they only had them up to 1/2" at the hardware store I frequent. Other than reducing friction on the back of the spool and preserving the surface finish of the aluminum bar (which I don't care about), what's the reason for the spacer?

There's always been some kind of friction pad material on my mig feeders. What do they use for those? I suppose I could see if they have any at the service shop too.